Exercise 22-6 (Algo) Departmental expense allocations LO P2 Gomez Company has two service departments (Personnel and Office) and two operating departments (Shoes and Clothing). Following are the direct expenses and square feet occupied by the four departments, and the total sales for the two operating departments. Department Personnel office Shoes Clothing Sales Direct Expenses Square Feet 500 700 13,000 4,100 4,700 $124,000 186,000 $ 15,000 27,000 103,000 The company also has $74,000 of utilities expense, which is an indirect expense to all departments and is allocated to the four departments based on square feet occupied. The Shoes department has 38 employees and the Clothing department has 152 employees. Personnel expense is allocated to operating departments based on the number of employees. Office expense is allocated to operating departments based on sales. 1. Allocate utilities expense to the four departments. 2. Allocate personnel expense to the Shoes and Clothing departments 3. Allocate office expense to the Shoes and Clothing departments Utilities Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Personnel Office 0 Shoes 0 0 0 Clothing 0 Totals 0 Personnel expense Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Shoes 0 Clothing 0 Totals Office expense Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Clothing 13,000 4,700 186,000 The company also has $74,000 of utilities expense, which is an indirect expense to all departments and is allocated to the four departments based on square feet occupied. The Shoes department has 38 employees and the Clothing department has 152 employees. Personnel expense is allocated to operating departments based on the number of employees. Office expense is allocated to operating departments based on sales. 1. Allocate utilities expense to the four departments. 2. Allocate personnel expense to the Shoes and Clothing departments. 3. Allocate office expense to the Shoes and Clothing departments. Utilities Department Personnel Office Shoes Clothing Allocation Base. Square feet occupied Percent of Allocation Base Cost to be Allocated Allocated Cost Numerator Denominator % of Total 500 500 10,000 5.00% $ 74,000 $ 3,700 700 700 10,000 7.00% 74,000 5,180 4,100 4,100 10,000 41.00% 74,000 30,340 4,700 4,700 10,000 47.00% 74,000 34,780 Totals 10,000 100 00% S 74,000 Personnel expense Allocation Base Percent of Allocation Base Cost to be Allocated i Allocated Cost Department Number of employees Numerator Denominator % of Total Shoes 38 38 190 20.00% $ Clothing 152 152 190 Totals 190 80.00% 100.00% 74,000 $ 74,000 14,800 59,200 S 74,000 Office expense Allocation Base Percent of Allocation Base Cost to be Allocated: Allocated Cost Department Sales Numerator Denominator % of Total Shoes $ 124,000 $124,000 $ Clothing 186,000 186,000 Totals $ 310,000 310,000 40.00% $ 74,000 310,000 60.00% 74,000 100.00% S 74,000